DJ DGAP-Regulatory: TMK Announces 1H 2015 Operational Results
OAO TMK / Miscellaneous
29.07.2015 13:01
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29 July 2015 PRESS RELEASE
TMK Announces 1H 2015 Operational Results
The following contains forward looking statements concerning future events.
These forward looking statements are based on current information and
assumptions of TMK management concerning known and unknown risks and
uncertainties.
2Q 2015 and 1H 2015 Highlights
- In 1H 2015, TMK shipped a total of 1,957 thousand tonnes of steel pipe,
down 4.8% year-on-year. In 2Q 2015, shipments decreased by 3.3%
quarter-on-quarter to 962 thousand tonnes. The decline in shipments was
due to lower shipments of the American Division in light of the
unfavourable market situation. However, in the Russian Division, where
the demand for pipe for oil and gas industry remains steady, the
shipments grew by 10.2% quarter-on-quarter and year-on-year. Large
diameter pipe (LDP) shipments doubled in 1H 2015 year-on-year.
- In 1H 2015, seamless pipe shipments fell by 1.1% year-on-year to 1,213
thousand tonnes. Shipments in 2Q 2015 also went down by 4.1%
quarter-on-quarter to 594 thousand tonnes.
- In 1H 2015, welded pipe shipments fell by 10.2% year-on-year to 745
thousand tonnes. In 2Q 2015, welded pipe shipments were down 2%
quarter-on-quarter. It was OCTG (the American Division) and industrial
pipe that saw a decline, which is in line with the downward trend
regarding the share of low-margin products in TMK's shipments.
- In 1H 2015, shipments of premium threaded connections amounted to 363
thousand joints, down 11.1% year-on-year. In 2Q 2015, shipments of
premium products were down 9% quarter-on-quarter, totalling 173
thousand. TMK's share in the Russian market increased to 78% in 1H
2015.
2Q 2015 and 1H 2015 Summary Results
(thousand tonnes)
Products 2Q 2015 1Q 2015 Q-o-Q, % 1H 2015 1H 2014 Y-o-Y, %
Seamless pipe
594 619 (4.1%) 1 213 1 227 (1.1%)
Welded pipe
369 376 (2.0%) 745 829 (10.2%)
Total
962 995 (3.3%) 1 957 2 056 (4.8%)
Including OCTG
328 425 (22.7%) 753 971 (22.5%)
1H 2015 Market Overview and Performance by Division
Russian Division
The Russian pipe market demonstrated moderate growth in 1H 2015. The rise
in demand for tubular products allowed the Company to increase shipment
volumes and strengthen its position in the Russian market. At the end of
the reporting period, the Company's share of the shipments to the Russian
market grew and exceeded 25%, whereas TMK's share in seamless OCTG totalled
67%.
In 1H 2015, TMK's Russian Division shipped 1,521 thousand tonnes(1) of
tubular products, up 10.1% year-on-year. In 2Q 2015, the division shipped
797 thousand tonnes of pipe, up 10.2% quarter-on-quarter.
In 1H 2015, the Russian division's seamless pipe shipments grew by 3.4%
year-on-year to 918 thousand tonnes. In 2Q 2015, the division shipped 459
thousand tonnes of seamless tubular products, which is almost flat
quarter-on-quarter.
In 1H 2015, the division's seamless OCTG shipments decreased 7.8%
year-on-year to 495 thousand tonnes. The decline was driven by a general
drop in demand for casing and drill pipe on the Russian market. However, in
2Q 2015, the shipments were up 1.5% quarter-on-quarter, reaching 249
thousand tonnes.
In 1H 2015, the division's shipments of seamless line pipe increased by
23.3% year-on-year to 263 thousand tonnes. In 2Q 2015, shipments of this
product decreased by 12.3% quarter-on-quarter to 123 thousand tonnes.
In 1H 2015, the division's shipments of seamless industrial pipe went up by
16% to 160 thousand tonnes. The second quarter saw 87 thousand tonnes of
this product shipped, up 19% quarter-on-quarter.
In 1H 2015 the Russian Division shipped 603 thousand tonnes of welded pipe,
up 22.3% year-on-year. This growth was mainly driven by the increase of LDP
shipments for gas trunk pipeline projects. In 2Q 2015, welded pipe
shipments grew by 27.8 quarter-on-quarter to 338 thousand tonnes.
In 1H 2015, the division's LDP shipments amounted to 343 thousand tonnes,
achieving an almost twofold growth year-on-year. The growth was driven by
the construction under two major pipeline projects: Southern Corridor and
Bovanenkovo-Ukhta - 2. In 2Q 2015, the LDP shipments were up 20.9%
quarter-on-quarter to 188 thousand tonnes, which results from the launch of
TMK shipments for the Power of Siberia project.
(1) This includes shipments from TMK's Russian facilities, TMK-Kaztrubprom
and TMK GIPI to the Russian, CIS and non-CIS markets (excluding North
America).
American Division
In 2Q 2015, Baker Hughes reported a decline in the average active rig count
in the USA by 35% quarter-on-quarter to 907 rigs due to the continuing
slump in oil prices, which resulted in a lower demand for OCTG and growth
of pipe inventories. At the same time, large volumes of pipe are still
imported to the American market, which contributes to the pressure on
prices.
Against this backdrop, the American Division shipped a total of 352
thousand tonnes of pipe in 1H 2015, down 40.6% year-on-year. In 2Q 2015,
the shipments were down 47.1% quarter-on-quarter, totalling 122 thousand
tonnes.
In 1H 2015, shipments of seamless pipe dropped 18.1% to 209 thousand
tonnes. In 2Q 2015, the division shipped 91 thousand tonnes of this
product, down 23% quarter-on-quarter.
In 1H 2015, shipments of seamless OCTG pipe dropped by 12.3% to 173
thousand tonnes. In 2Q 2015, shipments of this product fell by 32.3%
quarter-on-quarter to 70 thousand tonnes.
In 1H 2015, TMK's American Division shipped a total of 14 thousand tonnes
of seamless line pipe, down 21.7% year-on-year. However, in 2Q 2015,
shipments of this pipe product trebled to 11 thousand tonnes
quarter-on-quarter.
In 1H 2015, the shipments of seamless industrial pipe dropped 44.2%
year-on-year to 23 thousand tonnes. In 2Q 2015, the division shipped 11
thousand tonnes of this product, down 11.5% quarter-on-quarter.
In 1H 2015, welded pipe shipments were down 57.8% year-on-year to 142
thousand tonnes. In 2Q 2015, welded pipe shipments fell 72.7%
quarter-on-quarter to 30 thousand tonnes. The decrease in low-margin welded
pipe segment was triggered by the weak demand, price drop and high volumes
of welded OCTG import. In 1H 2015, TMK shipped a total of 84 thousand
tonnes of welded OCTG pipe, down 63.4% year-on-year.
European Division
In 1H 2015, the European pipe market was still tough due to growing
competition, which puts pressure on prices. Nevertheless, in the first half
of 2015, TMK's European Division shipped a total of 85 thousand tonnes of
seamless pipe, up 2.9% year-on-year. In 2Q 2015, the shipments were up 3.4%
quarter-on-quarter, reaching 43 thousand tonnes.
Premium Segment
In the first half of 2015, TMK's Russian and American Divisions shipped a
total of 363 thousand TMK UP premium threaded connections, down 11.1%
year-on-year. In 2Q 2015, shipments of premium products were down 9%
quarter-on-quarter, which is mainly due to the decline in demand. The
premium segment remains a strategic priority for the Russian division
especially in view of the opportunities for import substitution.
Outlook
Further Russian market outlook will stem from several factors, mainly
global oil prices, which have a strong impact on the oil and gas industry
capex. In the Russian Federation this factor is less significant, as its
adverse effects are smoothed out by ruble devaluation.
One of the essential drivers behind the Russian pipe market growth was
major pipeline projects. In addition, the Company has a chance to
strengthen its positions in the seamless OCTG segment due to lower imports
of this product into Russia.
In the Russian market of welded and seamless industrial pipe will see a
decline in demand due to a slowdown in the construction and engineering
industries.
TMK expects the OCTG demand in the American market to remain flat until the
end of 2015 on the back of low drilling activity. However, no further
market slump is expected as the shipments have already touched their low.
In case of winning the anti-dumping investigation on imports of line pipe
into the USA, this segment will be able to grow more rapidly. In 2016, the
demand for OCTG and line pipe is likely to gradually go up, provided that
oil prices and drilling volumes stabilise and inventories decline.
In 3Q 2015, TMK expects no improvement in the European pipe market due to
the holiday season. Further on a subsequent slow recovery is expected. In
2015, TMK expects shipments to remain broadly flat year-on-year. Lower
sales in the USA will be offset by higher shipment volumes in the Russian
Division.
In general, the Company retains the positive dynamics in the most
profitable segments of the business. Along with the improvement of the
terms of payment on the part of large consumers, it allows TMK to generate
additional cash flow and direct them to reduce debt.
***
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well as download the YourTube iPad application from the App Store
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***
TMK (www.tmk-group.com)
TMK (LSE: TMKS) is a leading global manufacturer and supplier of steel
pipes for oil and gas industry, operating more than 30 production sites in
the United States, Russia, Canada, Romania, Oman, UAE, and Kazakhstan and
two R&D centers in Russia and the USA. In 2014, TMK's pipe shipments
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July 29, 2015 07:01 ET (11:01 GMT)
totalled 4.4 million tonnes. The largest share of TMK's sales belongs to high margin oil country tubular goods (OCTG), shipped to customers in over 80 countries. TMK delivers its products along with an extensive package of services in heat treating, protective coating, premium connections threading, warehousing and pipe repairing. TMK's securities are listed on the London Stock Exchange, the OTCQX International Premier trading platform in the U.S. and on the Moscow Exchange. TMK's assets structure by division:Russian division: American division: Volzhsky Pipe Plant; 12 plants of TMK IPSCO; Seversky Tube Works; OFS International LLC; Taganrog Metallurgical TMK Completions. Works; European division: Sinarsky Pipe Plant; TMK-ARTROM; TMK-CPW; TMK-RESITA. TMK-Kaztrubprom; Middle East Division: TMK-INOX; TMK GIPI (Oman); TMK-Premium Service; Threading & Mechanical Key Premium LLC (Abu- TMK Oilfield Services; Dhabi). TMK CHERMET.TMK Corporate Communications Alexander Goryunov Tel: +7 (495) 775-7600 E-mail: pr@tmk-group.com 29.07.2015 The EquityStory.RS, LLC Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de =-------------------------------------------------------------------------- Language: English Company: OAO TMK 40/2a Pokrovka 105062 Moscow Russia Phone: +7 495 775-7600 Fax: +7 495 775-7601 E-mail: tmk@tmk-group.com Internet: tmk-group.com ISIN: US87260R2013 Category Code: MSC TIDM: TMKS Sequence Number: 2755 Time of Receipt: Jul 29, 2015 12:59:52 End of Announcement EquityStory.RS, LLC News-Service =--------------------------------------------------------------------------
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